The aggregate supply curve shows the quantity of goods and services that firms are willing to supply at each price level. In the short run it is assumed that the prices of factors of production remain unchanged so that an increase in the price of the finished product should increase profitability and cause firms to increase output.
The short run aggregate supply curve (SRAS) will be relatively elastic as increased output will only lead to slight increases in costs, perhaps due to lower productivity or the payment of overtime rates. Wage rates and other factor costs are unchanged.
lydiajane74 answered the question on July 4, 2018 at 20:08
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